Wednesday, August 15, 2012

US becoming armed camp fueling Russian arms industry

By Andrew E. Kramer, New York Times, August 14, 2012 IZHEVSK, Russia — The nickname of this town, home of the factory that makes Kalashnikov rifles, is the “Armory of Russia.” Over the years, it has armed a good number of other countries, too, as the lathes and presses of the Izhevsk Machine Works clanged around the clock to forge AK-47s and similar guns for insurgents and armies around the world. But these days, many of Izhevsk’s weapons are headed somewhere else: the United States. Despite the gun’s violent history — or perhaps because of it — American hunters and gun enthusiasts are snapping up tens of thousands of Kalashnikov rifles and shotguns. Demand is so brisk that the factory has shifted its focus from military to civilian manufacture over the last two years. United States sales of the civilian versions, sold under the brand name Saiga, rose by 50 percent last year, according to officials at the factory, known as Izhmash. Over all, the United States is the world’s biggest market for civilian guns. That is partly because of comparatively lenient gun ownership laws, which have become a topic of renewed debate after a rampage last month in which a masked gunman killed 12 people and wounded 58 in an Aurora, Colo., movie theater. Although no Kalashnikovs were involved, police say one weapon used by the man charged with the shootings, James Eagen Holmes, was a popular semiautomatic pistol made by the Austrian company Glock. Russian weapons accounted for a tiny portion of the $4.3 billion American gun market last year, but Saiga sales rose far faster than the overall growth rate of 14 percent in 2011. “I bought a Saiga because it was made in Russia, right beside its big brothers, the AKs,” Josh Laura, a garage door installer and former Marine in Maryville, Tenn., said in a telephone interview. “No rifle in the world has been as reliable as this one.” Selling rifles to Americans and other civilians is fundamental to the efforts to save Izhmash, which has made Kalashnikovs since soon after their invention in 1947 but is now struggling. Demand for new military guns in the Kalashnikov family has evaporated. Simple, durable and relatively cheap to manufacture, about 100 million have been produced over the decades, or about one for every 70 people on earth. Inventories are overflowing, used AK weapons have flooded the market, and cheap Chinese knockoffs are stealing many of the customers that remain. For American gun enthusiasts, an authentic Russian-made Kalashnikov is appealing not only for its historical importance as the weapon of choice in so many global conflicts, but also because of its reliability. “The quality and versatility far surpassed anything else on the market,” said Terry Sandlin, an electrician in Scottsburg, Ind., who has three Saigas — two shotguns and a rifle. Although the civilian versions cannot fire bursts of bullets with a single trigger pull — a military feature known as fully automatic mode — it otherwise shares many features of military guns. Izhmash works with an importer who modifies weapons to add pistol grips or large-capacity magazines in states where those features are legal. Maksim V. Kuzyuk, a board member of Izhmash and former chief executive, said that he studied the global market for small arms before deciding to focus on the United States. “Typically, an American family will have five or six short- and long-barreled guns,” Mr. Kuzyuk, a former director of the Boston Consulting Group in Moscow, said in an interview. “Some collectors have more than 20 guns.” And in the United States, Izhmash cannot be underpriced by Chinese competitors. The federal government has banned most imports of Chinese handguns and rifles since 1994. Selling Saigas in the United States is integral to the enterprise’s evolving business model of making single-shot civilian guns to occupy workers and equipment in between government orders for fully automatic assault rifles. About 70 percent of the factory’s output is now civilian rifles, up from 50 percent two years ago. Of the civilian arms, about 40 percent are exported to the United States. That means American consumers are now buying about the same number of Kalashnikov-style weapons from Izhmash as the Russian army and police. This shift has been encouraged by the Kremlin, which wants to revive a range of military industries by improving their economies of scale and helping them blend military and civilian manufacturing. a state holding company of which Izhmash is a part, is pursuing this policy across a range of industries, from aviation to truck manufacturing. The goal is to improve efficiency as Russia begins a $613 billion rearmament program, financed by oil money.

It was with this mandate, Mr. Kuzyuk said, that he came to Izhmash as chief executive in 2010 after working for another Russian Technologies enterprise, Avtovaz, the maker of Lada cars. (In May, he moved to yet another company in the group that makes helicopter parts.)
At Izhmash, as with other Russian military plants, he said, “the basic problem was the volume of production was significantly lower than what the factory had been designed for” — essentially a land war between superpowers.
Although AK pattern rifles are used every day in global conflicts, very few are bought from Izhmash because of the ready availability of used guns as well as licensed and bootleg copies. The Russian army isn’t planning many new orders until the AK-12, a new model to be introduced this year, is widely available.
The sales of civilian rifles in the United States are helping to pay for the factory’s retooling for the AK-12, ultimately making it cheaper for the Kremlin.
Owen Martin, owner of Snake Hound Machine, a gunsmith in Manchester, N.H., that specializes in Kalashnikov rifles, said that, by the same token, Russian military orders were helping keep down the price of AKs he and others buy in the United States. “It means our guns are cheaper,” he said. “Nobody perceives it as unpatriotic.”
American gun sales rose sharply in 2009, after President Obama’s election and the onset of economic recession. Sales of semiautomatic rifles, in particular, benefited from customer concern that Mr. Obama would seek to more tightly regulate rifles with features resembling military weapons, according to Lawrence Keane, senior vice president of the National Shooting Sports Foundation.
Izhmash benefits from American gun laws that are looser than in its home market. In Russia, consumers can buy a long-barreled firearm only with a police permit, which requires a clean criminal sheet, a diploma from a gun safety course and a medical certificate of sanity. In the United States, laws vary by state, but buyers often need to clear only an F.B.I. criminal background check.
However, gun control in Russia is less strict than in some other former Soviet countries. Estonia, for example, proscribes carrying a weapon while drunk. “If they did that here, well, nobody would hunt,” said Igor V. Anisimov, the Izhmash director of foreign sales.